Happy Friday, Barkada --
The PSE gained 43 points to 6761 ▲0.6%
Thanks to
Kuya Carl for recommending my
MB REIT Index and to /@unsilentrose for pointing out that the UBP SRO's ex-date is a Monday (more on that below).
LF: Crypto commentary I'm looking to add a section of daily crypto commentary, like what we get each day for technical analysis from
Mike Tan of VINI.ph. If you know of someone with a local cypto newsletter or channel that might want to collaborate, please send me a note!
Shout-outs to MJ Delgado, Marcos Maharlika-watan, Raphael Acilo, Jonathan Burac, Kuya Carl, Dominic Espinosa, MiUMaO, Stephen Chiong, Jay Agonoy, Palaboy Trader, arkitrader, Weeeerrr, meloi, Dividend Pinoy | PGG, Lance Nazal, Gab Magsino, leaf, Just’n, LanAustria, Evolves Capital, Inc., Chip Sillesa, and Jing for the retweets, and to Evolves.co and Mike Ting for the FB shares!
- Inflation was up 8.1% in December
- Union Bank: additional notes on the SRO
- US Fed has no plans to lower rates in '23
- AboitizPower gets P20-B loan from Landbank
- Vivant buys solar plant for $5-M
▌Main stories covered:
- [NEWS] Inflation was up 8.1% in December... National Statistician Dennis Mapa [link] said that headline inflation and core inflation were both up from November, to 8.1% and 6.9%, respectively. The additional inflationary pressure was driven largely by price increases for food stables like fruits and vegetables. The BSP had projected December inflation to fall within the range of 7.8% to 8.6%, with analysts (on average) predicting that December inflation would land at around 8.2%.
- MB: While that’s not good, it’s marginally lower than many expected, and it could turn out to validate the BSP’s position that inflation would likely peak in December. Is that true? Has inflation peaked? Or is this just another point on a graph that is still headed higher? Sometimes bad news can be kind of good, and this is one of those times. So, it sucks that inflation is still increasing and that most people are spending more and more of their paycheck on the basic necessities of life, but the result is a little less terrible than we expected, so it might be a sign that the speed of the price increases may be lessening. Will the BSP still need to raise rates? Almost certainly. Both the BSP and the US Federal Reserve still believe that more needs to be done to tame inflation. The real question is how high will rates go, and at what point will the BSP be able to take its foot off the gas? Remember, we aren’t even talking about rate reductions yet. We’re just talking about when the BSP can stop increasing rates. The general cost of living is going to remain high for quite some time. This is the new normal.
- [UPDATE] Some additional notes on the Union Bank SRO... In yesterday’s post, I talked about Union Bank [UBP 89.8 ▲2.8%] [link] setting the price and entitlement ratio for its stock rights offering (SRO) and then quickly discussed the ex-date and record dates. I had a few readers write in to remind me that the January 9 ex-date is actually a Monday, so that means that anyone looking to participate would need to own the stock by the end of day today (January 6) and hold it through to the record day on January 12. I also had a few readers comment on whether or not I thought UBP to be a good long-term buy given its relatively high price-to-book value as compared to its peers, but banks aren’t really my thing, and besides, giving thumbs-up or thumbs-down recommendations is even less of my thing.
- MB: My intent was only to underline that the size of the discount was quite large, and that the level of the discount wasn’t likely to have a huge impact on the post-listing stock price given the small size of the SRO relative to UBP’s outstanding shares. Sure, this kind of transaction really benefits the owners as it allows them to get a great value for their injected capital, but it also gives long-term holders and short-term players alike an opportunity to make some money as well. Maybe you already own UBP and you’re not interested in increasing your position, but you could always avail of the SRO, and then sell the shares to push into something else that you might like, with that purchase partially funded by the difference between the discounted SRO price and the post-listing UBP market price.
- [NOTES] Quick takes from around the market...
- Federal Open Market Committee (FOMC) [link] meeting notes suggest that the US Fed will not be quick to lower interest rates. There had been a growing hint of optimism that recent positive inflation trends would lead the US Fed to at the very least signal that a pause was in order, but the minutes splashed a cold cup of water on those thoughts.
- MB Quick Take: This is pretty consistent for the toxic relationship between the US markets and the Fed. One ounce of good news gets the market looking ahead to brighter days, prompting the Fed to dash hopes and remind us that the journey to fight and kill the inflation flare-up will take more time and more patience. It’s a cycle that’s repeated a few times already, and given the market’s tendency to get caught up in waves of positivity, it’s bound to happen again before this whole mess is fixed.
- AboitizPower [AP 34.7 ▼0.9%] [link] received a ₱20 billion loan from Landbank to fund AP’s renewable energy projects. The renewable energy investments will be made through AP’s subsidiary, Aboitiz Renewables Inc., and will be a component of AP’s plan to spend ₱190 billion over the next 10 years to add 3.7 gigawatts of renewable energy to the Philippine grid.
- MB Quick Take: A big loan to support an ambitious spending goal. AP has so many tailwinds right now that shareholders must be just waiting to see how management puts it all together. It’s early, but as we saw with the previous administration, time can run out quickly on even the most obvious of corporate/government love teams. Moves like this tell me that AP is not satisfied to wait.
- Vivant Corporation [VVT 12.8 unch] [link] to purchase 100% of the shares of a bulacan-based solar power plant owner/operator called San Ildefonso Alternative Energy Corp. (SIAEC) for an estimated US $5 million. VVT is buying SIAEC from Cleantech Global Renewables Inc., with the final per-share price to be adjusted based on Cleantech’s year-end financials. VVT said that the acquisition is meant to increase VVT’s renewable energy footprint, and “generate returns” for shareholders.
- MB Quick Take: Operating renewable energy projects are great little acquisitions. I don’t know VVT’s plans with its RE portfolio, but the management team at least enjoys the option of trying to roll up a bunch of these types of projects into a REIT if they sought to monetize the income stream and keep the acquisitions train moving. Projects can only be “REITed” if they’ve been operating for at least 3 years.
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